GateHouse plans temporary salary reductions in Massachusetts

Thursday

May 28, 2009 at 12:01 AMMay 28, 2009 at 1:52 AM

GateHouse Media New England plans to implement a temporary salary reduction starting next week as it reacts to an industrywide downturn in advertising sales. The company, which publishes nearly 100 other newspapers in the state, announced the salary reduction to employees on Thursday. The pay cut is aimed at saving $2.5 million this year.

Jon Chesto

GateHouse Media New England plans to implement a temporary salary reduction next week as it reacts to an industrywide downturn in advertising sales.

The company, which publishes nearly 100 newspapers in the state, announced the salary reduction to employees on Thursday. The pay cut is aimed at saving $2.5 million this year.

The size of the pay reduction will vary depending on an employee’s salary, ranging from 7 percent up to just under 15 percent for the company’s top earners.

The average pay cut would be 7.75 percent. If the reduction lasts through the end of 2009, it would have the effect of an average pay cut of 4.5 percent for the full year.

Rick Daniels, CEO of GateHouse Media New England, said the broad pay cut was a necessary step to ensure the Needham-based publishing group, a division of GateHouse Media Inc. of Fairport, N.Y., will remain profitable in the face of steeper-than-expected advertising declines.

“We know what happens to newspapers who are no longer cash-flow positive, and we’re committed to not let that happen,” Daniels said. “We understand this is a sacrifice for our employees, and a serious one. But we think, in light of keeping this company stable and strong, that it’s one worth making.”

The wage reduction is one of several steps the company has taken to pare back expenses. GateHouse cut its New England work force by about 10.5 percent since the start of the year through a mix of layoffs, voluntary buyouts, attrition and work-week reductions. After the latest round of job cuts, GateHouse Media New England will have the equivalent of more than 1,100 full-time employees.

The pay reductions will take effect next week, except for unionized employees. GateHouse will need to negotiate with unions who represent workers at The Patriot Ledger, The Enterprise of Brockton and The Herald News of Fall River to persuade them to agree to a pay cut.

Daniels said it’s too early to know when employees’ pay levels could be restored. He said that will be determined by a rebound in ad revenues or achieving other forms of savings, and that he hopes the cuts can be restored, either in whole or in part, by the beginning of 2010 or earlier.

Many other major newspaper companies across the country have already adopted pay cuts or furloughs during the past two years as they struggle in this advertising downturn. Locally, The New York Times Co. is seeking approvals from unions at The Boston Globe, which the Times Co. owns, to cut employees’ pay levels as the Globe tries to avoid a projected $85 million loss for 2009.

Declines in ad sales were particularly steep for the industry in the first quarter of this year, as many advertisers reined in spending because of the recession and chose less expensive or free online alternatives.

“The industry, in general, was reporting ad revenue declines of high 20 percent to low 30 percent (compared with the same time in 2008),” Daniels said. “While we were in the lower end of that range, we were certainly in that range.”

GateHouse publishes eight dailies and more than 90 weeklies in Massachusetts, making it the largest newspaper publisher in the state.